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Colorado Issues Cease And Desist Order To 4 Crypto Startups Over ICOs

The Colorado Securities watchdog issued cease and desist orders to four cryptocurrency startups asking them to stop promoting unregistered securities to residents of the state. This brings the total number of cease-and-desist orders signed by Colorado Securities Commissioner Gerald Rome to 12.

In May, an “ICO Task Force” within the Colorado Division of Securities had carried out an investigation into potentially fraudulent activities targeting investors excited about the prospects of financial windfall through the cryptocurrency market.

Bitcoin Investments Ltd allegedly claims to be a “leading blockchain investment firm and one of the largest institutional owners of cryptocurrencies managing over $700 million” across multiple funds. It does not appear to be affiliated with the site Bitcoin.org, the Department of Regulatory Agencies (DORA) said. The site allegedly claims that investors can expect over 1 percent daily returns with additional returns on internal exchanges of “DB Token.” “the average registered investment return over a two month period in 2017 was an amazing 95 percent,” it claimed further. The ICO lists a number of celebrity promoters such as NBA basketball player Carmelo Anthony.

Most concerning to investigators was the alleged “spoofing” of a U.S. Securities and Exchange Commission webpage, www.Howeycoins.com, that was set up to educate potential cryptocurrency investors about the associated risks. Bitcoin Investments’ site incorporates the same format, exact images, and an identical employee team as the SEC site. Despite access to the site by Colorado residents, the DB Token ICO has not been registered as a security with the Division.

Pinkdate, a company providing “anonymously-operated, world-wide escorting services”, purportedly seeks to raise over $5 million through an ICO in a cryptocurrency referred to as PinkDate Platform (PDP). Through a white paper, PinkDate allegedly promotes a payout to investors of “50 percent of Net Profits through dividends,” and offers to provide dividends in the form of Bitcoin, Ether, Monero, or Bitcoin Cash. Investigators were unable to identify a business location. Dora noted that the PinkDate ICO has not been registered with the Division of Securities.

Prisma’s website allegedly claims that through the lending model investors can profit up to 27 percent on their initial investment, and the “arbitrage bot” can generate returns of up to 1.5 percent daily.

Clear Shop Vision Ltd. has offered three ICOs since June of 2018. The cease and desist order states that one of the tokens was represented as having “serious appreciation potential,” and investors are asked to send ether directly to the company’s wallet rather than an exchange. The company also allegedly offers to pay users in its token to promote the launch “on social media, translation services, and referrals.”